Apr 82019

Court Allows Off-Label Marketing Claims Against Individual Pharmaceutical Executives

Scott D. Stein and Neil Nandi
,

Following a recent Florida case allowing an FCA suit to proceed against an individual pharmacy owner (on which we reported here), last week a judge in the District of Massachusetts ruled on a motion to dismiss an FCA action pending against nine individual defendants relating to allegations of off-label marketing of the Aegerion drug Juxtapid, which was approved to treat Homozygous Familial Hypercholesterolemia (“HoFH”).  See United States ex rel. Clarke v. Aegerion Pharms., Inc., Case No. 1:13-cv-11785.  The individuals filed a joint motion to dismiss, making arguments that applied to the complaint as a whole – such as causation and materiality – and also attacking the claims specific to the individuals.  The court denied the motion as to the broadly applicable arguments.  Most notable, however, is the Court’s discussion of whether the relators could pursue claims against individual defendants, including board members and executives of the manufacturer.

The individual defendants were an Aegerion Board member who was President of a venture capital firm, an Aegerion National Sales Director, the Aegerion Vice President of Global Marketing, and persons who had been Aegerion’s CEO, CFO, COO, and Chief Medical Officer.  Aegerion and two other defendants had previously been dismissed from the suit.  Aegerion’s dismissal followed a $28.8 million civil settlement and a guilty plea by the company, making this the rare FCA case in which claims proceed against executives after the corporation has already settled.

The court dismissed the claims against the Board member because the relators had not alleged that he “directed, implemented, participated or conspired in the alleged marketing scheme”; instead, the only non-conclusory allegation tying him to the scheme was that he attended a Juxtapid launch party that included presentations about “not defining HoFH” and he was aware of financials that depended on off-label use.  Although the relators had alleged that the Board member benefitted from the false claims, they did not show a “connection” between that defendant and the off-label marketing scheme.  Slip Op. 21-22.  These were the only claims the court dismissed.

The court described the claims against the former CFO as a “close call” because the CFO was not directly involved in the scheme.  However, the court allowed the claims to proceed because he had “intimate knowledge” of Aegerion’s financials, the company experienced growth “beyond what would be possible but for the off-label marketing,” and the CFO’s participation in investor calls showed “willful blindness to the fact that Juxtapid was being marketed and sold for off-label use.”  The court distinguished the CFO from the Board Member, because the CFO had engaged in “some affirmative act” during the time of the scheme – seemingly referring to his duties as CFO and participation in financial calls – from which the jury could infer “his knowledge and participation in the scheme.”  Slip Op. 25-26.

Other executives had roles in the scheme that were more significant, but still not directly involved in the off-label marketing.  Specifically, the COO allegedly set sales targets that included off-label use and encouraged using misleading sales techniques to convince doctors to prescribe Juxtapid for non-approved uses.  Slip Op. 26.  The CEO allegedly misrepresented scientific data to investors, estimated a potential patient market far in excess of the number of persons diagnosed with HoFH, and pressured sales reps to data mine for potential Juxtapid candidates by ignoring the FDA-approved indication.  Slip Op. 27.  The former Chief Medical Officer similarly stated a much larger HoFH prevalence than existed, which the court held led “to the natural inference that he was both aware of and participating in the company’s strategy to inflate this number to increase sales.”  Slip Op. 25-26.

The sales and marketing personnel had the most clearly defined roles in the alleged scheme.  One of the sales reps personally recruited patients and filed out medical necessity forms, while the other sent providers a misleading letter about Juxtapid’s FDA approval.  Slip Op. 22-24. The former Vice President of Global Marketing allegedly trained a sales team in “best practices” that were part of the off-label scheme and encouraged data mining for Juxtapid patients.  Slip Op. 28.  Finally, the relators alleged that the former National Sales Director presented HoFH as more prevalent than it was and told sales reps only to choose doctors to be speakers if the doctors “believe in our definition of HoFH.”  Slip Op. 28-29.

The court’s opinion can be found here.

Scott D. Stein

Chicago

sstein@sidley.com

Neil Nandi

nnandi@sidley.com

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